As the summer travel season in the US goes into high gear, prices at the pump are the highest they have been in a few years, but oil imports into China are down year-on-year, pushing prices for Brent crude down
“The reason oil prices are trading lower today is that the market, despite the recent bullish signals, started realising there is some reluctance from the buy-side to support the current high price levels,” said Rystad Energy oil markets analyst Louise Dickson. Ms Dickson said China’s half year crude imports have reportedly fallen by 3% against the same period in 2020.
“As China is the world’s top crude oil importer, a decline in imports, especially since it is the first one in many years, is a significant price signal for the market to step on the brake pedal,” she said.
Traders were selling September contracts for Brent crude oil (ICE) at US$76.15, down US$0.34 at 10:57 AM EDT on 14 July. Price volatility is expected to last throughout the remainder of the summer months.
Offshore drilling, meanwhile, continued to strengthen globally. Stronger activity in the Middle East and stable drilling in the North Sea and southeast Asia pushed the offshore jack-up rig market to its highest levels in 2021, with more than 346 units contracted globally during the week. Floater activity, meanwhile, slipped two units week-on-week, falling to 114 units during week 28, according to Westwood Global Energy’s RigLogix.
Decarbonisation of offshore drilling is among the top priorities in the sector. In the North Sea jack-up market, Equinor has exercised an option to add additional well intervention work to the previously agreed work scope for the low-emissions jack-up rig Maersk Intrepid at the Martin Linge field offshore Norway. The added well intervention scope has a firm duration of 31 days, locking up the rig until February 2022. The firm value of the contract extension is approximately US$10.5M, including integrated services but excluding potential performance bonuses.
In the floater market, Seadrill is employing FS Marine+ technology on its sixth-generation drill ship West Saturn to reduce CO2 and greenhouse gas emissions. Fuelsave said its FS Marine+ optimises combustion through the dynamic injection of hydrogen, oxygen, water and methanol. By making combustion more efficient, the system significantly reduces fuel consumption and harmful emissions such as CO2, NOx and black carbon. Emissions of CO2 are expected to be cut by 10-15%, and NOx by 30-80%.
West Saturn will be deployed in the Bacalhau field in Brazil. Partners in Bacalhau are Equinor, ExxonMobil, Petrogal Brasil and Pré-sal Petróleo.
Woodside Energy awarded Valaris a 16-well contract for the semi-submersible Valaris DPS-1. Expected to start late in Q1 or early Q2 2022, the contract will have an estimated duration of 300 days in offshore Australia.
Meanwhile, Woodside reported completing the acquisition of the entire participating interest of FAR Senegal RSSD SA in the Rufisque Offshore, Sangomar Offshore and Sangomar Deep Offshore (RSSD) joint venture.
Woodside acting chief executive Meg O’Neill called the Sangomar project “a key priority” for the company in 2021. Woodside is awaiting the arrival of Diamond Offshore’s drill ship Ocean Black Rhino for the project, with first oil targeted for 2023.
Senegal’s first offshore oil development, the Sangomar Field Development Phase 1 will comprise a stand-alone floating production, storage and offloading vessel (FPSO) permanently moored in 780 m of water with a production capacity of approximately 100,000 barrels per day, 23 subsea wells and supporting subsea infrastructure. Subsea Integration Alliance, an alliance between Subsea 7 and OneSubsea, will build and install the subsea production system and subsea umbilicals, risers and flowlines.
MODEC is supplying the FPSO Léopold Sédar Senghor, the former very large crude carrier Astipal, which is being converted in Dalian, China, by COSCO Shipyard.
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